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Tax Implications from the Sale of Residential Real Estate

Oh, Where to Begin?

With the complexity of the tax code it was a challenge to lay out this page and decide how far to go in helping our customers. With this in mind, again I would like to make sure you understand that we are not Tax Professionals. Anyone who owns Real Estate should find a reputable Professional to help them maximize their Tax Strategy according to their circumstances. This information is for educational use only. As always you may contact us for specific questions. Links and contact info are at the bottom of this page.

Federal Tax

Here we will go over a few highlights and provide links to more in depth information.

  1. You do not have to pay tax or even report gains of up to $250,000 if you are single and $500,000 if you are married, when you have lived in the home for at least 2 out of the last 5 years as your primary residence. Of course as in anything concerning taxes there are exceptions and limitations. There are 2 links below to research this wonderful benefit of owning a home. The first link is to a IRS Tax Tip which has an overview and the second link is to the more in depth Publication 523 (Selling Your Home--excluding the gain).

  2. If you are not able to utilize the above exclusion, the profit from a sale of your property will be considered Capital Gains. If you have owned your property more than 1 year you have a long term Capital Gain, less than 1 year is a Short Term Capital Gain. Short Term Capital Gain is considered as ordinary income and is taxed at your normal income tax rate. Long Term Capital Gain is taxed at 15% maximum rate.

    IRS Publications:

  3. 1031 Exchange. Section 1031 of the U.S. Internal Revenue Code allows investors to defer capital gains taxes on the exchange of like-kind properties. 1031, or tax-deferred exchanges hold great advantages for investors. Because of the complexity of these exchanges it would be best to contact the Human Agents to discuss your situation. 954-566-3225

State Doc. Taxes

Our Florida State Taxes are paid at closing and included in closing costs. As a seller you usually pay only one of the 3 State Doc Taxes, the Dock Stamp on Deeds. Of course exactly who pays which tax is negotiable in the contract. The tax is $.70 per $100 of Sales Price or fraction thereof. This is figured by dividing the Sales Price by $100 and Adding 1 for any fraction of 100, then multiplying by $.70
Example
$100,500÷100=100.5 there is a fraction of point 5 so add 1
100+1=101
101x .70=70.70
Your Tax would be $70.70

Property Tax

Being an owner you have already been paying this tax to the local governments. At closing it is prorated to the amount of the year that you owned the property and you pay that amount at closing.

That about covers Taxes. The Next Step is:  Time Line.

Call us at:
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